Efforts by real estate investment trust Redefine Properties to reposition and simplify its asset platform were now largely complete, its chief executive officer Andrew Konig said yesterday.
The process to dispose of non-core assets to reduce Redefine’s loan to value (LTV) to acceptable levels has ended, he said.
In January this year, Redefine got the green light to acquire EPP, Poland’s largest retail landlord, in a R7.2bn deal, and delisted it in March.
“Our EPP business business is well integrated into Redefine and the liquidity position has been stabilised,” Konig said.
Redefine reduced its LTV by 2.2 % following its strategy to sell off its non-core assets and optimise its property portfolio, it said in its results for the year ended August 31 this year.
The LTV fell from 42.4% in 2021 to 40.2% over the period, in line with the target range of 38% to 41%.
Redefine achieved R9.4 billion in asset disposals compared with R5bn in 2021. This included R2.8bn of South African properties. Six logistics properties were sold and one built-to-suit development by European Logistics Investment (ELI) for R2.2bn, among other sales.
"The initiatives to maintain the LTV within this range include ongoing optimisation of the property asset base through the selective disposal of non-core local properties and the sale of two Polish Power Parks, as well as a focus on organic growth in asset values," it said.
Konig said that while Redefine has had to rethink its business in a rising inflation and interest rate environment, the results “demonstrate the outcomes of our purpose of creating and managing spaces in a way that changes lives”.
The group also delivered a distributable income of R3.6bn, from R2.9 bn the prior year. Total group revenue, excluding straight-line rental income, increased by 11.3%. Headline earnings per share rose to 83.80 cents, from 72.27 cents a year earlier.
It declared a gross cash dividend of 19.27321c per share for the six months to the end of August.
"The increase in revenue from the previous year was due to the acquisition of a controlling stake in EPP, offset by negative rental reversions and disposal activities," the group said.
Active South African occupancy levels improved from 92.9% to 93.3%, boosted by continued recovery after the lifting of Covid-19 pandemic restrictions. The active portfolio vacancy rate decreased during the year to 6.7%.
Redefine, with a mark cap of R29bn, said its local property portfolio performance was driven by the continued recovery post the lifting of Covid-19 pandemic restrictions.
"Although the operating environment remains challenging, there are encouraging signs of recovery. The retail portfolio recovery continues to improve, supported by the increase in footfall at the various malls.
"Hard-hit category retailers such as restaurants, health and beauty, cinemas and travel agents continue to trade below pre-Covid-19 pandemic levels as consumer spending is focused on essentials and value items," Redefine said.
“Geopolitics affect all of us and this is playing out in a sharp increase in energy costs and rising inflation. But then, on the flipside, you see logistics benefiting from a move to ‘friend shoring’, where companies move into friendlier territories where they can do business safely, like Poland... fuelling growth in demand for logistics,” Koning said.
Redefine’s local property asset platform was valued at R58.9bn as at August 31, from R60.3bn, the prior year, while the offshore real estate investments were valued at R30bn from R12.6bn, the prior year.
BUSINESS REPORT